The Director of the African Department at the International Monetary Fund (IMF), Abebe Aemro Selassie, has raised concerns about the hype and excitement often surrounding governments’ issuance of Eurobonds, cautioning that such enthusiasm can obscure underlying risks.
Speaking in an interview with Bernard Avle on Channel One TV’s The Point of View on Wednesday, January 21, Mr. Abebe Selassie noted that while Eurobonds remain a popular financing option, borrowing in domestic currency is often a more prudent alternative.
“I think I also worry a little bit about, you know, all this glitz and excitement that we have about Eurobonds. When the government is issuing domestic bonds… I mean, there are really fundamentally really important reasons, because you’re borrowing in your own currency, and by and large, provided you’re prudent, that’s okay. But every time there’s a Eurobond issue, it’s kind of, you know, all the hype,” he said.
He explained that the IMF routinely undertakes comprehensive assessments of countries’ economic policies and financing strategies, including debt sustainability analyses, to identify and flag potential vulnerabilities.
“Ghana, going back as far as 2014 or so, has been categorised at high risk of debt distress. So we identify the level of debt vulnerability and have been flagging that since then,” he stated.
Mr. Abebe Selassie stressed that Ghana’s debt challenges cannot be attributed solely to policy decisions, noting that shifts in the global economic environment have also played a role.
He further clarified that the IMF does not borrow on behalf of countries, emphasising that financing decisions ultimately rest with national authorities.
“There’s nobody out there who will tell you that the IMF has been going out and borrowing. If anything, we’ve been making that case the other way around. But fundamentally, at the end of the day, the decisions, of course, are fundamentally sovereign decisions,” he said.
